Immigration Status and Taxes: Paying U.S. Taxes as an Immigrant

If you have immigrated to the U.S., you must understand how immigration law and IRS taxes apply to you. This is particularly important for lawful permanent residents or green card holders, who are generally treated as U.S. tax residents regardless of where they live or earn income

The article discusses the interplay between immigration law and taxation law for a particular tax year. Learn how your immigration status impacts your tax responsibilities and more.

Tax rules can affect immigration status, eligibility for benefits, and even future citizenship. An immigration attorney can help you understand your obligations and avoid costly mistakes.

Tax Residents vs. Non-Tax Residents

The United States classifies individuals into two categories for taxation purposes under the Internal Revenue Service: tax residents and non-tax residents.

Even if you are a noncitizen of the U.S., there are many situations where you might be required to file taxes. Whether or not you have to file and pay taxes depends on whether the U.S. government has classified you as a tax resident. The U.S. Citizenship and Immigration Services (USCIS) can confirm this information.

For example, the U.S. government requires all permanent residents, including green card holders, to pay income tax. However, not all non-immigrant visa holders are considered taxable residents. Even undocumented workers and undocumented immigrants could fall into the grey area of U.S. immigration and taxation.

If you’re in doubt, it makes sense to get legal help. An immigration attorney who can provide you with legal advice about filing federal income tax returns.

United States tax residents must report their entire income to the IRS and pay taxes based on that amount. The filing of income taxes may be recorded with either a Social Security Number or an Individual Taxpayer Identification Number (ITIN) if you’re a nonresident alien.

Whether the money was earned within your home country or a foreign country doesn’t matter. You must report income from all over the world to the IRS. But some countries have certain tax treaties with the United States, which can affect the amount of tax you owe.

Furthermore, the U.S. provides a Foreign Earned Income Exclusion. This allows U.S. citizens to exclude a portion of their foreign-earned income from U.S. taxation.

Green Card Holders and Taxes

If you are a green card holder, you may wonder how your immigration and taxes will work. As mentioned above, as soon as you acquire the status of a permanent resident of the United States, you are automatically classified as a U.S. tax resident. You must then report your income to the IRS, whether earned abroad or domestically.

A common misconception is that your tax residency status depends on the number of days you spend in the U.S. While this is true for nonimmigrant visa holders, it does not apply to green card holders. Even if you have a green card and do not step foot in the United States all year, you must still report your income to the IRS.

Like almost every other taxpayer in the United States, green card holders must file tax returns using an IRS Form 1040 annually by the tax deadline. Failing to file your United States taxes as a green card holder may hurt your chances of becoming a U.S. citizen. If you intentionally do not file your taxes, you may also be guilty of a crime that could result in losing your green card and possible deportation. 

Specific information about your situation can be found on the IRS website.

Nonimmigrant Visa Holders and Taxes

Unlike holders of green cards, holders of nonimmigrant visas may or may not have to report income and pay taxes to the United States Government. The government applies the “substantial presence test” to determine the tax obligations of nonimmigrant visa holders. The threshold is 183 total days spent in the United States over the course of three year period. So, if you hold a nonimmigrant visa and spend 200 days in the United States, the IRS will likely need you to report your income.

Think of taxation as a point system. Every day you stay in the U.S. yearly counts as one point. However, the days you stayed in the U.S. last year are not as “heavy”. They are only counted as one-third of a point. And then the days you spent in the country two years ago will only be counted as one-sixth of a point.

Now, if you add all these points in the past three years, it may total 183 “weighted” days (or weighted points) or more. Even if you were in the U.S. for less than 183 days, you might still be responsible for U.S. taxes. The only exception is if you stayed in the U.S. for less than 30 days this year.

However, this rule does not apply to certain government employees, other professionals, and students.

If neither of these rules classifies you as a U.S. tax resident and you maintain a tax home in another country, you may not fall under the U.S. tax obligations. But this does not necessarily exempt you from paying U.S. taxes, as you may still owe taxes on U.S. source income.

If you are confused about your immigration and taxes, consult IRS Form 519, U.S. Tax Guide for Aliens. This guide can answer many questions, particularly questions related to eligibility and exemptions. If you still have questions about income tax, contact an immigration attorney in your area.

Like green card holders, nonimmigrant visa holders who spend at least 183 days in the U.S. must file their taxes using IRS Form 1040 by the tax deadline, paying taxes on all income earned within the United States. But unlike green card holders, nonimmigrant visa holders do not have to pay taxes on earnings made outside the United States.

Failing to file your U.S. taxes may be a criminal offense, which could eventually lead to your deportation from the country. In addition, failing to follow tax laws could also jeopardize your chances of adjusting your immigration status or obtaining U.S. citizenship.

An Attorney Can Help You Understand Your Tax Responsibilities